My Final Post on Digital Distribution, I Swear

A lot of themes have emerged at Sundance this year. The environment. The economy. Noisy gum-chewers.

But the most popular topic, at least in my experience, has been the question of digital distribution: How the hell are filmmakers supposed to make money when, every year, more and more people are downloading movies for free? No one on the “What’s Next? The Digital Distribution Imperative” panel today had an answer to that question, but everyone agreed that the industry needs a solution—and fast.

“Guys, we gotta make this happen now, or this industry could collapse a little,” Jeffrey Winter, a panel programmer, said in introducing the panel at New Frontier.

Jordan Hoffner, head of content partnerships for YouTube, said what’s obvious is that filmmakers “have got to get paid somehow,” and that right now the main models are either consumer-based (movie ticket sales, Netflix subscriptions, etc.), which is being threatened by internet piracy, or advertising-based. The latter may not suit certain films, he said, using the Doors documentary WHEN YOU’RE STRANGE as an example.

“Was there nudity?” he asked. “Yes. Was there profanity? Yes. Does that appeal to big-box advertisers? No.”

YouTube has quietly launched a movies section where users can watch full-length films (with the occasional pop-up ad). The company inks standard revenue-sharing contracts with filmmakers, who then get paid based on how many users watch their film. “If you don’t have a lot of views and don’t have a lot of ads—because you don’t have a lot of views—you’re not going to get paid,” he said. (The Sundance Channel is testing the YouTube waters with the doc CRAZY LOVE.)

Still, as several panelists said, the ad model has never made anyone more than a couple hundred thousand dollars, which isn’t nearly enough to pay for the production costs of most independent films.

As for current trends in digital distribution, Variety’s Anne Thompson said, “There’s a big gap between what everybody wants and what they can get.” People might not want to watch long videos (TV shows or films) on their iPhones or BlackBerries, she added, “but I think they want to watch it one their computer,” citing Hulu.com as an example.

I’d say that’s an accurate read—of my generation anyway. Some of my friends pay for cable and rent movies via Netflix. Just as many them, however, watch whatever’s available online (at ad-based sites like Hulu or NBC.com, or streaming on Netflix.com) or buy digital content through iTunes or Amazon. Still others, like me, download shows and movies using torrents—without paying a cent or viewing a single ad. Video-on-demand is growing at the moment, as Thompson noted, and may be “what’s next”—the immediate future—but it doesn’t strike me as the future.

“People are showing a huge aversion to paying—we have to acknowledge that,” said Efe Cakarel, the founder and CEO of The Auteurs, which streams indie and foreign films online (for a price). “We have to be way more creative about making money.” (Still in beta mode—with just 100 films and 45,000 users—his company is backed by Criterion stateside.)

Cakarel, who struck me as the most forward-thinking panelist, said he often looks to Asia for insight because of its overwhelmingly young and tech-savvy consumer base, not to mention that their broadband speeds put ours to shame and there’s “a healthy disrespect for copyright” there. In Korea, said Cakarel, people download an average of 54 movies per year, compared to about the same number in minutes in the U.S.

“The challenge is when you have all of this clutter,” said Hoffner, who described the experience of perusing video content online—including, to a certain extent, on YouTube—as a “random walk.” Sean Carey, executive vice president of Sony Pictures Home Entertainment, argued that “you need a champion, whether that’s a wider network or a distributor,” to help filter content.

Cakarel disagreed, contending that users, not companies, will decide what’s of value and what’s not—that content will separate from the pack based on word-of-mouth, most likely via social networking platforms like Facebook. All of this talk about VOD and hi-def, he said, and yet people are watching low-res, low-bit rate videos on Hulu. The future of film and TV is online, he concluded. Not in the next few years, “but at some point it will hit like there’s no tomorrow.”